Crypto Guide: How To Start Trading Crypto

Crypto trading is a widely discussed topic in the social media space by people from all over the world and even by celebrities and the news. You may have heard friends or people online who were early in the crypto space had made unimaginable returns from trading cryptocurrencies.

Earlier in 2021, Bitcoin caused a massive crypto craze phenomenon when Bitcoin reached USD $64k on 12th April 2021 from approximately USD $11k in Oct 2020, a growth of more than 450% in about 6 months.

Stock investors, both new and seasoned, and also people who have never traded before are asking the same question:

How to trade Bitcoin?

With all the attention that crypto is receiving, it can be tricky for new investors to figure out how to get started and where to trade in the market. But not to worry!

In this article, we will cover important details that you should know about so that you can trade safely and most importantly increase your odds of success.

Crypto Guide 101: What is Cryptocurrency

Cryptocurrency is a digital currency, highly secured by decentralized blockchain technology which uses cryptography data to ensure accurate transaction logs on the ledger. Because of its ability to store cryptographic data, it makes it nearly impossible to counterfeit or log a double-spend record.

Types of Cryptocurrencies

The first blockchain-based cryptocurrency that was created was Bitcoin, a highly valuable and most popular cryptocurrency asset to date. Fast forward to the present day, alternate cryptocurrencies with various functions and specifications are flooding the market.

A quick look at CoinMarketCap.com, a market research website, will show you a list of more than 10,000 different types of cryptocurrencies that can be traded publicly. Some of these cryptocurrencies were listed as Initial Coin Offerings (ICOs), a form of capital-raising activity in the cryptocurrency and blockchain environment.

Investors usually purchase these cryptocurrencies on specifically listed cryptocurrency exchanges prior to their public sales launch for the public to trade.

How Cryptocurrency Works?

The first decentralized cryptocurrency, Bitcoin, has been around since 2009, created by presumably a programmer(s) under the pseudonym Satoshi Nakamoto.

The idea behind creating a decentralized cryptocurrency like Bitcoin was to enable people to complete financial transactions over the Internet. This form of digital currency was intended as an alternative payment system that is free from central control or any intermediary like a bank.

The blockchain technology that Bitcoin operates on ensures the accuracy of digital records for every transaction that has ever been made by storing cryptographic information on various blocks of data. These blocks of data which have all digital records of the transaction are chained together in chronological order, creating a digital chain of blocks.

Blockchain’s decentralized feature made it possible for anyone to view the ledger of cryptocurrency transactions once the block of data has been added. to the blockchain. This means that it’s not controlled or owned by any organization.

The idea of a decentralized blockchain is what made Bitcoin extremely popular, trustworthy, and secure. The transaction block can’t be updated to the Bitcoin Blockchain without completing its verification mechanism using unique codes and the right encryption pattern to recognize the user’s wallet and confirm the transaction.

5 Things You Should Know About Trading Crypto

Understanding crypto for the first type can make your head spin if you’re not looking at the right places. It’s hard enough to piece all the information that you find on the internet to make sense of it. Once you do get a good grasp on the subject, it’ll be a breeze.

Research Before Investing

The first step to getting involved in Crypto is to understand what blockchain technology is. How can they be used and their potential to advance and be more effective in processing different types of transactions?

A good starting point is to read articles, check out online forums, and videos online talking about certain crypto, or even find out what this crypto company is building for their company’s ecosystem.

You’ll soon find out why governments and corporations are exploring this technology and looking into integrating it into their system, or why some organizations take blockchain technology and cryptocurrencies as a threat to their existing ecosystem by implementing drastic measures like limiting their users to using the certain feature on their platform/service them entirely.

Through your research, you may even realize that services like purchasing insurance, handling shipping inventory, merchant payment transactions, gaming transactions, and real estate transactions can utilize blockchain technology to make transactions a smoother and more accurate process – All thanks to Smart Contracts.

Invest What You’re Willing To Lose

Crypto is a highly volatile market. Without experience in trading, investing funds that you cannot lose is a high-risk move that may cost your entire fortune in that split second.

The crypto market is driven by crypto communities and you can expect to experience the hype and market sentiments more so than fundamental elements. Crypto is risky in this manner, which is also the same reason why some traders are able to profit and lose everything in that instance.

You should always exercise with utmost caution and responsibility for your own funds. Never ever use a gambling mindset to execute any trades. You’re only signing up for imminent failure.

Avoid the ‘Get Rich Quick Scheme’ Mindset

One of the many pitfalls newbies make while learning how to trade crypto is to look for a shortcut to execute their trades.

Instead of learning and gaining confidence with their own trades, they depend on crypto trading signals without knowing if the trades they have executed are reliable or not. Trade often fails, and people lose substantial amounts of hard-earned money just because of laziness.

There are different crypto groups out there that may be offering free crypto trading signals or other crypto-related services (i.e Crypto trading, Pump and Dump events). More often they are not legit and can cause you to lose your money faster than you know.

This ‘Get Rich Quick Scheme’ mentality, in constant pursuit of short-term gains can hardly provide you any long-term results especially if you’re not equipped with the necessary trading or technical skills.

It’s imperative that every trade that you execute is based on self-reliance, due diligence, and constant hard work.

Diversify Portfolio

Every cryptocurrency has its own feature, popularity, and use case for the ecosystem that they operate on. Essentially, there are different coins in the crypto space.

NEVER PUT ALL YOUR EGGS IN ONE BASKET

Bitcoin and Ethereum are the oldest and most highly valued cryptocurrencies to date. They research the foundation of the cryptocurrency world. For example, Ethereum’s ecosystem is constantly growing. As a utility token, its potential can be stretched beyond the horizon.

That’s why it’s recommended to have a sizable amount of investment for either of these coins. They are considered to be more stable.

Following, you can consider spreading the remaining portion of your funds across other types of valuable altcoins that have the potential to disrupt the crypto space.

Pro-tip: Look for altcoins that solve real-world problems, not meme coins that only exist for hypes.

Tracking Your Profit & Loss

The key to profitability while trading cryptocurrencies, is to make more profitable trades than losses. You’ll need to pay attention when you should be buying and selling to profit from the margin.

You might trade on a weekly basis, monthly basis, or even daily basis. No matter what your schedule is, keeping track of your trades can help you identify your mistakes and make any adjustments along the way.

This is because you’ll be able to look at your own record, analyze where you have gone wrong and if needed you may even decide to change your trading strategy when the time comes.

Decide On Your Trading Style

It doesn’t matter if you’re new or a seasoned trader, you’ll find out what is your preferred trading style as you trade and learn.

The crypto market has its own sentiments. It may be on an Upward (bullish) trend or a downward (bearish) trend. You might find that you’re better at identifying bullish trends, and can trade profitably. You’ll most likely buy low and a certain price, and sell at its peak. It’s called trading a Long position. The opposite would be trading a Short position.

Some traders are more comfortable trading certain position sizes to manage risk. Others are comfortable trading bigger positions but with a shorter time frame.

There are traders who hold longer periods of time frames for maximum profitability trades.

Day trading, position trading, swing trading, and scalping are the most common types of trading styles. It’s beneficial to find what you’re comfortable with and be good at it.

What Do You Need To Buy & Sell Crypto

The concept of buying & selling crypto is easy, but to truly set yourself apart from an average trader with a crypto trader who actually profits from the market, is to empower yourself with the necessary knowledge to increase your odds of success.

Start-Up Capital – Funding Your Crypto Account

Never use funds that you cannot afford to lose! It isn’t worth it to gamble your life away thinking that you can strike a pot of gold within a short period of time. Trading cryptocurrency is a learned skill set that takes time to be good at.

Instead, the wiser way is to set aside a portion of funds that you can use for investment. You may find that you can contribute more to your investment funds along the way, which you can totally do so at a later time.

With this in mind, you can then move forward to transfer your funds to trade at a cryptocurrency exchange.

Finding a Reliable Cryptocurrency Exchange

Picking the right cryptocurrency exchange can be complicated without knowing what to look out for. To help you find a reliable cryptocurrency exchange, we have prepared a checklist of the things you should look out for.

• Restricted Countries
• High Trading Volume
• Types of Trading Products
• Low Trading Fees
• Easy Deposit & Withdrawal process
• Deposit & Withdraw Fees
• Great Community Review
• Accessible Customer Service

Crypto exchanges come with different types of features, they never offer the same trading products, trading fees, or customer services. Some Crypto exchanges offer more altcoins, better trading fees, or cheaper withdrawal fees than others.

Information in the checklist can easily be found on the cryptocurrency exchange’s website.

By using the checklist above while doing your research, you can get a better sense of which cryptocurrency exchange is more suitable for your use.

Best For Beginners

Easiest & Safest to Buy & Sell Crypto
Ratings: 4/5

Coinbase

Fastest Exchange For All

Global Cryptocurrency Leader Since 2013
Ratings: 3.8/5

Huobi Global

Largest Cryptocurrency Varieties

Trade Over 1000 Cryptocurrencies
Ratings:3.5/5

Gate.io

Learn Trading Fundamentals

Successful crypto traders are only profitable because they know what they are doing without relying on strangers’ trade signals. They execute their trades based on their trading analysis along with crypto fundamentals.

Learning trading fundamentals will help you trade safely, and know when you should buy and sell. Most importantly, increase your odds of profitability for your trades.

CryptoTrading Pairs

Cryptocurrency Exchange would provide different crypto trading pairs such as ___/USDT, ___/BUSD, ___/USDC, ___/AUD, ___/ETH, ___/TRX, ___/XRP, ___/BTC, ___/BNB etc.

Crypto exchanges that are versatile can provide a lot more different crypto trading pairs. You have the option to choose the currency pairs with the base currency that you already possess.

For example, if you own USDT. Depending on your crypto exchange, you can trade crypto pairings like:

• BTC/USDT
• ETH/USDT
• ADA/USDT
• MATIC//USDT
• LIT//USDT
• AAVE/USDT
• DOT/USDT
• SOL/USDT

Let’s say you’re trading BTC/USDT. You’ll be trading your USDT for BTC. So if the value of BTC goes up, you can sell it and gain profit in USDT.

If you own BTC, Depending on your crypto exchange, you can trade crypto pairings like:

• ETH/BTC
• FTM/BTC
• BNB/BTC
• SOL/BTC
• DOT/BTC
• XRP/BTC
• ADA/BTC
• BETA/BTC

Let’s say you’re trading ETH/BTC. You’ll be trading your BTC for ETH. So if the value of ETH goes up, you can sell it and gain profit in BTC.

Crypto Fundamentals Analysis

Crypto fundamentals analysis is another valuable skill to pick up as a crypto trader. It simply refers to understanding the intrinsic value of a crypto asset. Cryptocurrencies are native tokens of a certain crypto company that actually has a business model behind them.

These businesses are technology companies that produce their products on various decentralized blockchain networks. They can belong to different type of cryptocurrency market (i.e Gaming, Exchange, Social-Network, etc)

When analyzing crypto fundamentals, there are a few factors to consider to reduce investor risk.

• Blockchain Metrics (ON-chain Metrics)
• Hash Rate
• Financial Metrics

Trading Patterns

Yes, trading patterns are used to identify the best entry points for maximum profits and to mitigate risks. Trading patterns have two distinguished trends, bullish and bearish.

Bullish suggests strong, uptrend momentum. A rise in value per se.
Bearish suggests the opposite, a downtrend momentum. A decrease in the value of the asset.

Trading patterns used along with other trading indicators such as the relative strength index (RSI), MACD, and money flow index, can assist the trader to forecast future market movement.

The chart always tells a story, providing hints. It’s a matter of empowering yourself with the necessary knowledge to use these tools to make a profitable trade with the lowest risk involved.

Is it easy to learn trading patterns?

It’s actually quite easy once you’ve learned to use the price bar to connect the dots with lines. Learning will curve would be present but never be intimidated by it.

Secured Cold Storage Wallet (Hardware Wallet)

A cold wallet, also known as a hardware wallet, is the most secure method of storing and managing your crypto assets.

Cold storage wallets are not connected to the internet, furthermore, secured with mnemonic phrases and private keys that only you have access to. The mnemonic phrases and private keys are proof of ownership of your cryptocurrency assets. It’s paramount that the owners keep these data in a secure place.

Furthermore, you can connect hardware wallet and execute your trades on decentralized Apps (dApps). By doing so, you can ensure better security as you are keeping your funds safe in your personal hardware wallet instead of trusting your crypto funds in a company’s custodian wallet holdings.

Software wallets like Metamask are a popular choice used by many crypto traders to transfer their cryptocurrencies as well.  However, software wallets need to be connected to the internet and can potentially have more risk. Cold storage wallets have a reputation for being impenetrable because of this reason.

Learn more about crypto wallets here and find out which ones will be a better fit for you.

When transferring cryptocurrencies with your crypto wallet, they use a unique wallet address supported by a particular blockchain network to complete the transfer. Completed transactions can be verified through a blockchain scanner as these records are considered public records.

This unique crypto wallet address is not easily readable by humans.

Example: 0x3d3e4aad19c05464761ff0298be872c8af0736be

That’s why owning your blockchain domain is so easy as it allows you to input your wallet address without any fuss.

Turns to this: Mywallet.crypto

Is It Too Late To Invest In Crypto?

It’s never too late to invest in crypto. Volatility in the market will always be present. Crypto Market sentiments change from time to time. You might be seeing this when the prices are high, or when it’s low.

Opportunities to invest in crypto and make a profit are always there IF you’ve the knowledge to do so. Crypto traders are able to stay profitable regardless if the market is bullish or bearish because they have a plan and strategy in place.

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